Tag Archives: 80%

Do you ever wonder why you are required to purchase building limits higher than you believe are necessary? If so, you are not alone. Insurance companies require you to buy building limits of insurance to satisfy the “Co-Insurance” clause in your policy.

Let us tell you more about Co-Insurance and why it’s an important part of your policy.

Co-Insurance requires that a home or business owner have a limit of insurance that is at least 80% of the total replacement cost of the property. Failing to meet this limit of insurance will result in a penalty and you would share in the loss. Here is how the penalty breaks down:

You may initially believe that committing to a conservative building limit would be a way to save money. In the long run, however, it would be unfortunate to encounter a loss and be left without adequate coverage.

If an insurance company determines you have purchased the proper limit, they will sometimes add terms to waive the co-insurance penalty. You can also ask your agent if you qualify for the “Agreed Amount Endorsement” to see if you can void the co-insurance clause.

The time to find out that you are not adequately insured is not the time of your loss. Be safe, protect your assets, and contact us for more information about your co-insurance clause.

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Ask Sherri

Do you have an insurance question? If so, e-mail it here and our insurance professional Sherri will give you the scoop on all you need to know. Your question might also appear in our Ask Sherri video series!

Ask Sherri
Do you have an insurance question? If so, e-mail it here and our insurance professional Sherri will give you the scoop on all you need to know. Your question might also appear in our Ask Sherri video series!

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